Financial reporting
Learn what financial reporting is, the main statements, and the SAK and tax rules that apply in Indonesia.
Published Wednesday 30 September 2026
Table of contents
Key takeaways
- Financial reporting turns your day-to-day transactions into statements that show your profit, cash position and overall financial health
- A complete set of financial statements in Indonesia includes five parts, with the notes explaining the numbers in the other four
- Indonesia has dedicated accounting standards for smaller and private businesses, and every corporate taxpayer must attach financial statements to its annual tax return
- Reviewing your reports at least monthly helps you spot cash flow issues early and plan growth with confidence
What is financial reporting
Financial reporting is the process of turning your business’s transactions into standard reports that show its performance and financial position. These reports, known as financial statements or laporan keuangan, show what you earn and spend, plus what you own and owe.
Think of it as a regular health check for your business. A café owner in Bandung could use a monthly report to spot rising coffee bean costs before they cause a cash shortfall.
Owners, banks, investors and the tax office all rely on these reports, so accuracy and consistency matter. The sections below explain the main report types and the Indonesian standards that apply.
Types of financial reports
Under Indonesian financial accounting standards, known as Standar Akuntansi Keuangan (SAK), a complete set of financial statements has five parts. Pernyataan Standar Akuntansi Keuangan (PSAK) 201, Presentation of Financial Statements, sets out what they contain.
PSAK 201 was renumbered from PSAK 1 and has been effective since 1 January 2024. It confirms that the notes form part of a complete set.
Statement of financial position (balance sheet)
The statement of financial position shows what your business owns (assets), what it owes (liabilities) and the owners’ stake (equity) on a specific date. Banks use it to judge whether your business can cover its debts, for example, when you apply for a loan.
Statement of profit or loss (income statement)
The statement of profit or loss shows your income and expenses over a period, such as a month or a year. It shows gross profit (revenue minus cost of goods sold) and net profit (what’s left after all other expenses and taxes).
Statement of cash flows
The statement of cash flows tracks cash moving in and out of your business across operating, investing and financing activities. It explains why a profitable business can still run short of cash, for example, when customers pay their invoices late.
Statement of changes in equity
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The statement of changes in equity shows how the owners’ stake in the business moved during the period. It records items such as profit kept in the business and dividends paid to shareholders.
Notes to the financial statements
The notes explain the numbers in the other four statements. They cover the accounting policies you’ve used, plus details such as loan terms or how you value stock.
How financial reporting works
Financial reporting follows five steps that repeat every period, whether you report monthly or once a year. Each step builds on the one before, so accurate records at the start make the final reports easier to prepare.
1. Record your transactions
Start by recording every sale, purchase, payment and receipt in your accounting system. Track money customers owe you in accounts receivable and bills you need to pay in accounts payable, so your reports reflect your true position.
2. Reconcile your accounts
Next, match your accounting records against your bank statements to confirm every transaction is recorded correctly. Reconciling at least monthly helps you catch missed payments and duplicate entries before they distort your reports.
3. Prepare your financial statements
Once your accounts are reconciled, produce the four main statements and the notes. Accounting software builds most of these straight from your records.
4. Review and audit
Check your statements for errors or unusual movements, ideally with your accountant or bookkeeper. If your business meets the audit criteria under Indonesian company law, a public accountant (akuntan publik) also needs to audit them.
5. Share and file your reports
Finally, share the reports with the people who need them, such as your shareholders, bank or investors. Attach your financial statements to your annual tax return (SPT Tahunan) and file it with the Directorate General of Taxes (DJP).
Why is financial reporting important
Financial reporting gives you an accurate picture of how your business is performing, so you can act on facts. It also keeps you on track with your tax and legal obligations.
Tracks your income and expenses
Regular reports show exactly where your money comes from and where it goes. Picture a printing business that spots paper costs climbing in its monthly report. It can raise prices or change suppliers before margins shrink.
Good small business accounting habits keep this tracking simple. The more consistent your records, the clearer the trends.
Keeps you compliant with tax rules
Indonesian tax rules require companies to keep books and submit financial statements with their annual tax return. Up-to-date reports mean you’re ready for filing season with a full year of records already in order.
Supports better business decisions
Financial reports help you answer big questions with confidence. Can you afford to hire, is it time to expand, should you raise prices, and where could you cut back? Tracking profitability ratios such as net profit margin over time shows whether your decisions are paying off.
Gives you real-time visibility
Cloud accounting software updates your reports as transactions flow in through bank feeds, so you can check your numbers whenever you need them. That makes it easier to manage cash flow day to day and see where you stand at any point in the month.
Benefits of financial reporting
Beyond compliance, regular financial reporting helps you run a more profitable and resilient business. Here are the main benefits for small business owners.
- Spot trends early and forecast income and expenses more accurately
- Find inefficiencies and set realistic budgets for each part of the business
- Build trust with banks and investors through clear, consistent reports
- Monitor cash flow so you can plan for quiet months and big purchases
Together, these benefits turn your reports into a planning tool. Your past reports feed straight into a cash flow forecast, which shows whether you’ll have enough cash to cover upcoming bills.
Who uses financial reports
Financial reports have two main audiences: people inside your business who run it, and people outside who lend to, invest in, tax or regulate it. Each group reads the same reports for different reasons.
Internal users
Internal users rely on financial reports to run the business day to day. They include:
- business owners and directors, who use reports to set goals and make decisions
- bookkeepers and finance staff, who prepare the reports and keep records accurate
- operations managers, who use reports to control costs and plan resources
- department heads, who track spending against their budgets
External users
External users rely on your reports to judge your business’s health or check that it meets its obligations. They include:
- banks and investors, who assess whether to lend to or invest in your business
- the DJP, which reviews the financial statements attached to your annual tax return
- the Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX), which oversee reporting by listed companies
- public accountants, who audit financial statements when the law or stakeholders require it
Financial reporting standards in Indonesia
Indonesian businesses prepare financial statements under SAK, set by the Financial Accounting Standards Board of the Institute of Indonesia Chartered Accountants (DSAK IAI). The tier you use depends on your type of entity.
SAK and its four tiers
Since 1 January 2024, SAK has had four tiers, each designed for a different type of entity. Here’s how they compare.
- SAK Internasional, the international tier of the framework
- SAK Indonesia, which is substantially converged with International Financial Reporting Standards (IFRS) and required for domestic companies whose securities trade publicly
- SAK Entitas Privat (SAK EP), which superseded SAK ETAP from 1 January 2025 and is converged with IFRS for small and medium-sized entities (SMEs)
- SAK Entitas Mikro, Kecil, dan Menengah (SAK EMKM), for micro, small and medium entities
Standards for small businesses: SAK EMKM and SAK EP
For a small business, the two relevant tiers are SAK EMKM and SAK EP. SAK EMKM is designed specifically for micro, small and medium entities, while SAK EP is converged with IFRS for SMEs and applies to private entities.
Your accountant can help you pick the right one based on who reads your reports, such as a bank or investor.
Tax bookkeeping requirements
All corporate taxpayers (wajib pajak badan) must keep books under Article 28 of the General Provisions and Tax Procedures (KUP) Law. They must also attach financial statements, including a balance sheet and profit and loss statement, to the annual tax return.
If your financial year matches the calendar year, the filing deadline is the end of April. The DJP’s Coretax system has applied since 1 January 2025. You must keep bookkeeping records and supporting documents for 10 years.
Audit and annual report requirements
Law 40 of 2007 governs limited liability companies (perseroan terbatas, or PT). A PT’s directors must submit the annual report to the general meeting of shareholders (GMS) within six months of year end. A public accountant must also audit the PT’s financial statements if the company:
- raises or manages public funds
- issues debt instruments to the public
- is a public company
- is a Persero (state-owned limited liability company)
- has assets, turnover or both of at least Rp50 billion
Listed companies have an extra step. Since 2015, they’ve filed financial statements with the IDX in eXtensible Business Reporting Language (XBRL) format.
Best practices for financial reporting
A few simple habits keep your financial reporting accurate and stress-free. Build these five practices into your routine.
- Set a consistent reporting schedule, such as the first week of every month
- Use standard templates so you can compare reports across periods
- Automate data entry and report generation with accounting software
- Reconcile your bank accounts at least once a month
- Share key reports with your accountant and other stakeholders regularly
Simplify your financial reporting with Xero
Clear, regular financial reports give you the confidence to plan ahead and stay compliant. Xero brings your accounting data into an easy-to-read set of reports, with bank feeds that keep your numbers up to date.
You can work with your accountant in real time and spot trends as they happen. Try Xero now and get one month free.
FAQs on financial reporting
Here are quick answers to common questions about financial reporting for small businesses.
Which financial report should a small business review first?
Start with your statement of profit or loss to see whether you’re making money, then check your statement of cash flows. Reading both together shows whether your profit is turning into cash you can spend.
How often should small businesses create financial reports?
Review your core reports at least monthly so you can act on problems while they’re small. During busy or tight periods, a weekly look at cash in and cash out gives you earlier warning.
What’s the difference between financial reporting and bookkeeping?
Bookkeeping is the day-to-day recording of transactions, while financial reporting summarises those records into statements that show performance and position. Good bookkeeping comes first, because your reports rely on the records behind them.
Do I need an accountant to create financial reports?
Accounting software lets you produce everyday reports yourself, and you’ll need a public accountant if your PT meets the statutory audit criteria. For help with SAK or tax filing, you can find an experienced advisor in Xero’s advisor directory.
What accounting standard should an Indonesian small business use?
SAK EMKM is built for micro, small and medium entities, so it’s the natural starting point for a small business. If your bank, investors or growth plans call for fuller IFRS-based statements, ask your accountant whether SAK EP suits you better.
How long do I need to keep financial records in Indonesia?
Keep your bookkeeping records and supporting documents, such as invoices, receipts, bank statements and contracts, for 10 years. Storing digital copies in cloud accounting software keeps them safe and easy to find if the DJP asks for them.
Related terms
Learn more about financial reporting
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.